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WOLF BLITZER, HOST: Happening now, escalating fears of all-out war in Libya. More bombs fall as Gadhafi loyalists step up the fight to reclaim parts of the country under rebel control.

President Obama stating unequivocally today that Gadhafi must leave. He vows the United States has the capacity to act if the situation further deteriorates.

And a potential GOP presidential contender now under serious fire for questioning President Obama's Americanism. Why Mike Huckabee says, and I'm quoting now, "most of us grew up going to Boy Scout meetings, not Madrassas."

I'm Wolf Blitzer, you're in THE SITUATION ROOM.

First to Libya right now, where opposition forces are desperately struggling to fend off heightened attacks from the Libyan dictator and his supporters. President Obama now issuing his strongest rebuke yet against the bloodshed.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The United States and the entire world continues to be outraged by the appalling violence against the Libyan people. The United States is helping to lead an international effort to deter further violence, put in place unprecedented sanctions to hold the Gadhafi government accountable and support the aspirations of the Libyan people. We are also responding quickly to the urgent humanitarian needs that are developing.

Tens of thousands of people from many different countries are fleeing Libya, and we commend the governments of Tunisia and Egypt for their response, even as they go through their own political transitions. I have, therefore, approved the use of U.S. military aircraft to help move Egyptians who have fled to the Tunisian border to get back home to Egypt.

I've authorized USAID to charter additional civilian aircraft to help people from other countries find their way home. And we're supporting the efforts of international organizations to evacuate people, as well. I've also directed USAID to send humanitarian assistance teams to the Libyan border so that they can work with the United Nations, NGOs and other international partners inside Libya to address the urgent needs of the Libyan people.

Going forward, we will continue to send a clear message, the violence must stop. Moammar Gadhafi has lost legitimacy to lead and he must leave. Those who perpetrate violence against the Libyan people will be held accountable. And the aspirations of the Libyan people for freedom, democracy, and dignity must be met.

(END VIDEO CLIP)

BLITZER: Our senior international correspondent, Ben Wedeman, is joining us now from Eastern Libya, and our White House correspondent, Dan Lothian, is joining us from the White House.

The president says all military options, Dan, are on the table right now, including the creation of a no-fly zone, but they're not being specific. Why?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: No specifics at all right now, because they want to see what happens on the ground, Wolf.

I did talk to an administration official and I was asking as to whether or not this no-fly zone was getting a warmer option for the administration. And this official telling me that they really want to see if the situation deteriorates on the ground.

You heard the president saying that he doesn't want to be hamstrung. They want to be able to react if the situation escalates pretty soon.

BLITZER: Ben, you're there with the rebels, you're in constant contact with them. Are they more interested in getting a no-fly zone created, or getting weapons, arms, from the international community right now?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Really, their focus, Wolf, is on the no-fly zone, because it's their Achilles' heel.

They can move forward. We're seeing they're getting better organized, they're getting better arms in terms of what they can pull out of the ammunition dumps. But what they don't have is air power.

And so, as they re-take -- they've re-taken Brega and they're talking about moving ahead, trying to get to the key petroleum export town of Ras Lanuf, which is on the road to Tripoli. But they realize that as they get stretched out along the highway, they could easily be just sitting ducks to the Libyan Air Force, which bombed this area today. They bombed it yesterday and they're worried, of course, that they'll bomb it again tomorrow, unless there is a no-fly zone.

That is their priority at the moment -- Wolf. BLITZER: I thought, Dan, the president made a powerful statement to the Libyan military, to the colonels, the majors, the top officials there, the officers saying, you know what, we're watching you and if you kill fellow Libyans, we'll go after you, we'll chase you, and to the end you'll be fully held accountable.

Here's the question -- How confident are they that they can split these elements of the military from Gadhafi and his thugs?

LOTHIAN: Well, they're certainly hopeful, Wolf. And as you point out, this is one way that the administration hopes that they'll be able to undermine his power, to isolate him by specifically going after those who are his advisers, those who are his allies.

And you heard that in the president's message today, say that any kind of violence is being monitored, and that they will be held accountable. The president pointing out that history is against Gadhafi.

So, again, the very strong message, not just to Gadhafi himself. You heard the president saying that he needs to step down from power, but also to those around him, believing that if they can erode that support around him, that will put more pressure on him to step down.

BLITZER: He does have a few allies out there in the international world, Ben -- Hugo Chavez of Venezuela, Robert Mugabe. How significant is that support that he's getting inside Libya, where you are right now?

WEDEMAN: It's largely insignificant to the people here. I mean, they look at Hugo Chavez and Robert Mugabe as sort of the natural friends of Moammar Gadhafi, by and large, international pariahs, certainly Robert Mugabe in Zimbabwe.

For the people here, they're looking to Europe, they're looking to the United States, to a lesser extent, to countries like Egypt for the kind of support they need. They discount anything that could be offered by Venezuela or Zimbabwe, countries very far away with dubious ability to change anything on the ground -- Wolf.

BLITZER: Ben Wedeman, we'll check back with you.

Dan Lothian, we'll check back with you as well. Thank you.

Three Dutch Navy personnel have been captured by armed Gadhafi loyalists, according to the Netherlands' Ministry of Defense. A spokesman saying the incident happened Sunday and intensive diplomatic negotiations now under way with Libyan authorities.

The spokesman saying the crew members were trying to evacuate a Dutch citizen from the region at that time. Libyan state television maintains they were in a fighter helicopter with no permission to enter the country.

You just heard President Obama expressing serious concern over what appears to be a huge humanitarian crisis in the making. CNN's Becky Anderson is over at the Libyan border with Tunisia, where tens of thousands of refugees continue to pour in.

(BEGIN VIDEOTAPE)

BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT (on camera): Well, they may have got some food, but as you can see, very few people have got any accommodation.

There's been 100,000 people over this border since February the 20th. They've got some 20,000 here and as far as the eye can see. The U.N. have set up an accommodation further down the road, but these guys really have got very little at this point. And they are still getting, they say, some 10,000 a day coming through. It's more of a trickle at this point in the day than it has been in the past couple of days. But this is a logistical crisis, which the U.N. says could become an absolute catastrophe.

Here on the Tunisian border, it's got to be said, these guys are calm, aren't they? I mean, things have got a lot more organized.

But the question is this -- how do we get all of these guys home? That is what the U.N. is struggling with at the moment, and that is why they need more help. Egypt Air sending some 20 flights day from an airport which is about 2.5 hours away from here.

But this is going to take an awful long time. Meanwhile, the hope is, of course, these guys are going to stay calm.

(END VIDEOTAPE)

BLITZER: Becky Anderson reporting from the border there.

Coming up, a renowned journalist now making the case that Gadhafi is "nuts, nuts." Just ahead, he'll tell us why.

And new clues into what may have motivated the alleged shooter on that deadly assault on two U.S. troops in Germany.

And does potential Republican presidential hopeful Mike Huckabee owe President Obama an apology? Just ahead, the controversial comments that landed him in political hot water.

JACK CAFFERTY, CNN CONTRIBUTOR: Mexican President Felipe Calderon met with President Obama at the White House today. The two leaders discussed everything from a trucking dispute that has hurt trade to the increasing violence in and near and along the U.S./Mexican border.

Relations between these two countries are worse than they've been in a long time now. Drug gangs rule the streets in a lot of Mexican border towns and violence is soaring. Since 2006, that's the year Calderon took office, 34,000 Mexicans have died in drug-related killings.

Three weeks ago, a U.S. Immigration and Customs Enforcement agent killed, another agent injured when their SUV was ambushed on a Mexican highway. It was the first time a U.S. agent has been killed in the line of duty in Mexico in 25 years. Investigators think the killers were members of the Zetas, one of Mexico's most dangerous drug cartels.

The violence continuously spills over the border into the United States. Authorities in Chandler, Arizona now say that a man who was beheaded last fall outside Phoenix was killed for stealing drugs from a Mexican drug gang.

The United States is the market for the drugs, and our government refuses to seal the border with Mexico. The twin issues of immigration and border security are all but ignored by our federal government, which is charged by our constitution with providing for our national security. It's an absolute disgrace.

Here's the question -- What's the answer to worsening relations between the United States and Mexico?

Go to CNN.com/caffertyfile, post a comment on my blog.

BLITZER: Jack Cafferty, thank you.

Let's get back to our top story right now, the crisis in Libya. Joining us now, "The New York Times" columnist Nicholas Kristof.

Nick, thanks very much for coming in.

As usual, you wrote a great column today. Your bottom-line conclusion, almost your lead, is that Gadhafi is, in your word, nuts. Tell our viewers here in the United States and around the world, including some viewers who are probably watching in Libya, why you think Gadhafi is nuts?

NICHOLAS KRISTOF, COLUMNIST, "THE NEW YORK TIMES": Well, his entire reign has been actions that have hurt his own rule, that have hurt Libya.

I mean, the example -- I began the column with a somewhat salacious example that I think was illustrative of that. He invited four, excuse me, five prominent female international journalists in for interviews and then after those interviews, one by one, invited them into his bedroom and on the record propositioned them.

And, you know, that just to me underscored the degree to which he is delusional. But the problem is that now he's not only delusional, he's also incredibly dangerous and there are chemical weapons, there's mustard gas running around as well. And I think that's one reason why it's so important that we make sure this stalemate doesn't drag on.

BLITZER: Well, he's clearly making it obvious he's ready to use conventional weapons -- air power, tanks, artillery -- against fellow Libyans. But you think he would use mustard gas, weapons of mass destruction, if you will, against his own people?

KRISTOF: I think he will use whatever it takes to remain in power. And I think that he would prefer not to massacre people, I think health prefer not to use mustard gas, but if his sense is that is what it's going to take, then -- I mean, he's already using mercenaries, he's already dragging people out of hospitals and executing them. I think he'll do whatever it takes.

BLITZER: We heard President Obama say today to the Libyan military, be careful cause if you kill fellow Libyans, we're going to go after you, the world court will go after you, the international criminal court, and you won't have any rest.

Is that a successful strategy in trying to wean away these military officers from Gadhafi?

KRISTOF: Yes. And I think that is the crucial point, that -- I think that some people have been saying that there's no way we're going to convince Gadhafi to let up or to change his mind. And of course, we're not, but that's not the point. What we're trying to do right now is peel away the Libyan military from Gadhafi and essentially, make them sit on their hands and not follow orders.

And the sense that I have from my conversations with people in Tripoli is that that is feasible. That the Libyan military really doesn't have the stomach to go shoot fellow Libyans.

BLITZER: You told an amazing story of one Libyan officer that you had been in contact with that is ready to break with Gadhafi, go public, even do a video for "The New York Times" website. You were nervous about that, but pick up the story.

KRISTOF: Well, so I asked this -- he was ready to go public, he was ready to give me this video, and I said, well, OK, what about your family. You're going into hiding, but what about your wife and children? And he was kind of blase about that and said, oh, he thought they would be safe. And I said, you know, really think about this.

And he came back to me that he'd thought about it and, well, he was OK accepting the risk that they might be killed. And I said, you know, one more time, you just really got to think this through.

And then he went back and actually consulted his wife, who was not very happy with this. And then -- so he put it on indefinite hold. And then, in the meantime, in the last few days, I think he's got the feeling that the tide is shifting and that maybe Gadhafi will hold on, and so now that whole defection is on hold.

And you know, I think there are a lot of people like that military officer who are wavering. And we've got to send a message that Gadhafi's going down, that they don't want to go down with him.

BLITZER: Why do you believe the Tunisian military refused to kill fellow Tunisians, the Egyptian military refused to kill fellow Egyptians, but the Libyan military is ready to kill fellow Libyans?

KRISTOF: Well, the Libyan units that have been most willing to kill fellow Libyans are those under the direct control of, for example, Gadhafi's own family, and those units are going to be really hard to separate.

But there have been other units that have, actually, you know, refused to participate. And one of the problems right now is that you have brigades that are tied to the Gadhafi family, that are located on three sides of Tripoli and -- that, you know, Gadhafi's family wants to go down with him, I think.

BLITZER: My sense is Gadhafi will stay until the bitter end. He won't go into exile, whether to Mugabe's Zimbabwe or Hugo Chavez's Venezuela or anyone else. I wonder if you agree?

KRISTOF: I just don't know. What I hear is that people close to Gadhafi have been telling him, oh, you've got to fight this out, you've got to hold on. But some people in Tripoli, who, you know, seem to know the -- him and the group around him say that it actually is possible, that he might be willing to go back to Seert (ph). And they play up to his ego, you know, that he's the founder of this revolution, he doesn't hold a formal title, and maybe give power to Mohamed al-Zwai, who was the nominal head of state, but actually -- and his old friends. So let al-Zwai run things and let Gadhafi fade away. I don't know if that would be acceptable to Gadhafi. I don't know if it would be acceptable to the rebels, but it might be one way of avoiding a real bloodbath.

BLITZER: Nicholas Kristof of "The New York Times," thanks very much. We read your stuff on "The New York Times" and on Twitter. And if any of our viewers want to follow you on Twitter, it's @nickkristof -- all one word -- and they should, if they're interested in getting good information.

Appreciate it very much.

Absentee Wisconsin lawmakers who skipped the state over a controversial union dispute are running out of time. They could face charges, stand by.

And are the Democratic senators making a statement or breaking the law?

And a good day on Wall Street. We'll check what sent the Dow soaring.

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now.

Lisa, a warning for Wisconsin Democrats today.

LISA SYLVESTER, CNN CORRESPONDENT: Yes, that is right, Wolf. Well, if Wisconsin Senate Democrats don't return to the capitol by late afternoon, they will be held in contempt. Wisconsin's State Senate approved the resolution this morning, arming law enforcement with a warrant to detain them. A Democratic staffer tells CNN, though, the arrests of lawmakers while legislature is in session is prohibited under the state constitution. The Democrats left the state to prevent a vote on the governor's budget bill.

And just moments ago, the Navy released its findings on the investigation into those raunchy videos broadcast aboard the USS Enterprise. Admiral John Harvey has issued non-punitive letters of caution to 32 officers and senior enlisted sailors. The videos, produced between 2005 and 2007, contain profanity and anti-gay slurs. Captain Owen Honors was relieved of his duties as commanding officer of the ship in January.

And prosecutors in Egypt want to talk to ousted President Hosni Mubarak. A former member of parliament says Mubarak will be brought to Cairo next week for questioning in connection with a number of corruption charges. Mubarak's believed to be at his residence in Sharm el Sheikh. This week, Egypt's attorney general issued a freeze of Mubarak's assets and prohibited the family from leaving the country.

And fueled by falling oil prices and better than unexpected unemployment report, the Dow posted its biggest gain this year today. It was up 191 points. The Nasdaq climbed almost 2 percent. Stocks also got a major boost from a calming in the energy markets; crude oil was down 53 cents a barrel. And I know a lot of folks, Wolf, are keeping an eye on those gas prices right now.

BLITZER: They're also keeping an eye on the jobs numbers coming out tomorrow morning, the numbers for February. If we've created 200 or 300,000 jobs, that would be significant as far as moving markets as well as helping to create jobs.

SYLVESTER: Yes, we'll be definitely covering that tomorrow, Wolf.

BLITZER: See what the numbers tomorrow morning, when it's released.

Thanks very much.

He's losing his grip on power. Today, President Obama says Gadhafi's lost his legitimacy to lead. How much longer can the Libyan leader maintain control of his country? You might be surprised. Stand by.

Plus, the alleged madman behind the killing of two American troops in Germany. Why authorities now say he was gunning, gunning for a deliberate showdown with American military forces.

(COMMERCIAL BREAK)

BLITZER: A lot of folks are wondering about the NFL and the players, what's going on. Lisa Sylvester's got some new information just coming in.

What happened?

SYLVESTER: Well, Wolf, we are getting word that according to NFL networks, they are reporting that both the players and the owners, they have reached an agreement, but just to have a 24-hour extension of the collective bargaining agreement.

That what this battle is all about, as you probably well know, Wolf, is some people have called this the millionaires versus the billionaire's fight. The players and the owners are trying to reach a final collective bargaining agreement. That current bargaining agreement expires at midnight, but they have now announced that they will have a 24-hour extension, Wolf.

BLITZER: Let these millionaires and billionaires continue talking for another 24 hours. Hopefully, they'll reach a deal and there will be football.

All right, Lisa, we'll stay on top of this. Thanks very much.

Opposition forces are in a constant and brutal battle to maintain their hold on parts of Libya they've already seized.

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: This is the type of border crossing between Tunisia and Libya a few days ago, the Libyan side was deserted of troops. Some 60 kilometers in is a small town of Nachlaot (ph). That currently is in control of opposition forces. We're hearing reports that people there are trying to fortify entrance to the city, digging in, expecting another military offensive.

(voice-over): One sign that pro-Gadhafi forces are reasserting themselves, they've reclaimed control of the border, unfurling a banner that congratulates Libya's brother leader. And it seems they are planning to stay. A local man gave us this video he shot Tuesday, of a Libyan helicopter bringing in supplies.

The few travelers crossing this border say the town of Nachlaot is in the hands of anti-government groups. Thirty-one-year-old Ahmed Gahanin from Egypt tells us he saw a burnt-out police station and civilians guarding the town.

He tells a harrowing story of the days he and friends spent on the road. Libyan soldiers near Tripoli cursed and beat us, he says. An account we've heard from many Egyptians.

Then they headed south across the desert, trying first to get into Algeria and ending up here. But at this border, the flow is still both ways. Medical supplies are piled high in a storeroom, intended for a local pharmacy just a few kilometers across the border. Libyan Naji Abdullah (ph) has come to collect them. He insists that everything is fine and adds, "Long live Muhammad." But in this remote and mountainous region of smuggling routes and clan loyalties, rumors are many and facts are few.

(on camera): We've been hearing all sorts of different reports from people we've been talking to coming across this border, which really just underscores how fluid the situation in Libya remains. And that country's fate, still far from determined.

Arwa Damon, CNN, at the Tahrir (ph) border crossing between Tunisia and Libya.

(END VIDEOTAPE)

BLITZER: We're also learning about one of the two U.S. servicemen shot and killed in Frankfurt, Germany, yesterday. His family says 21-year-old Airman First Class Zac Cuddeback was an Army brat who loved cars and hockey. He joined the Air Force in 2009.

U.S. and German officials also know more about the man accused in the deadly attack. CNN's Fred Pleitgen found a young man whose metamorphosis could be witnessed on Facebook.

FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Wolf, we are learning a lot more about the shooting suspect in this case. Of course, a 21-year-old man from Kosovo.

The German authorities and the U.S. authorities say that he was not on their radar as a possible violent Islamist. However, they do say it appears as though he was radicalized in a very short period of time.

(BEGIN VIDEOTAPE)

PLEITGEN (voice-over): Two American service members killed and two severely wounded, shot at the terminal of Germany's Frankfurt Airport, allegedly by this man, Arid Uka, a 21-year-old German of Kosovaran descent. Authorities say Uka is a radicalized Muslim and has confessed that he came to the airport with a handgun, specifically to kill U.S. troops.

"He wanted to conduct an attack on American soldiers," this official says. "He said that was his only aim. He did not have any other goals."

"At this stage of the investigation, it seems he acted on his own. We cannot make out a terrorist network at this point."

German authorities tell CNN Uka worked in the postal center at Frankfurt's airport, and that his radicalization happened in a matter of weeks. He changed his Facebook profile name to Abu Rayan (ph) and started posting links to Islamist content, officials say.

Arid Uka lives in this Frankfurt neighborhood with his parents. When we showed up, no one was willing to speak.

(on camera): While Uka's parents didn't want to speak to us, the neighbors here describe him as a friendly young man. Also someone who didn't have very much contact to the other people here in the house. Certainly, those we spoke to say they are shocked and never would have believed he would be capable of something like this.

(voice-over): Uka's uncle and a family friend echo that feeling. "What can I say? It's a catastrophe," the uncle says. And the family friends adds, "All I can say is that it's a black day for us and for the Albanian people. I can't say anything else."

German investigators say Uka spent a lot of time on this Web site called DawaFMM (ph), which they say is run by radical Frankfurt imam Sheikh Abdellatif. He's well known to German authorities.

Police raided apartments of Abdellatif's group in Frankfurt about a week ago, suspecting the imam of spreading radical Islamist ideology. No charges have been brought against him as of now, and investigators say they never came across Uka's name during the course of the search.

We attempted to contact the imam.

(on camera): This is the mosque where Sheikh Abdellatif is the imam. Now, we went to the door and we asked for him. They say at this stage he's not here and they're not sure when he's going to return.

(voice-over): Germany has increased security at American installations in the country, and authorities say after this incident, they will have to rethink the way they protect Americans in this allied nation.

(END VIDEOTAPE)

PLEITGEN: And Wolf, one of the other things that we've also learned is that this man apparently walked up to the soldiers prior to shooting them to make absolutely certain that they were, indeed, American military personnel. And the only reason he stopped shooting at some point and fled into the Frankfurt terminal building was because his weapon jammed. And certainly the German authorities believe the carnage could have been much worse if he would have been able to continue firing -- Wolf.

BLITZER: Fred Pleitgen on the scene for us. A disturbing story, indeed.

Potential presidential Republican contender Mike Huckabee sparks a political firestorm. Ahead, why he says the president is "molded out of a very different experience."

(COMMERCIAL BREAK)

BLITZER: Potential Republican presidential hopeful Mike Huckabee is at the center of a political firestorm right now after making rather controversial comments, questioning President Obama's Americanism.

Lisa Sylvester is here. She's got the details.

This is causing quite a stir right now.

SYLVESTER: It is, Wolf.

You know, Mike Huckabee has been out promoting his new book, doing rounds of media interviews, and some of his comments are raising hackles of liberals, who accuse him of an oblique smear campaign of the president.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Mike Huckabee has been very clear, he is not part of the so-called Birther movement and believes Barack Obama was born in the United States. But Huckabee's recent comments as part of a book tour have nonetheless stirred up controversy.

Take a listen to this radio interview with host Brian Fischer.

BRYAN FISCHER, RADIO TALK SHOW HOST: You seem to think there's some validity to the fact that there may be some fundamental anti- Americanism in this president.

MIKE HUCKABEE (R), FMR. ARKANSAS GOVERNOR: Well, and that's exactly the point that I make in the book. I have said many times publicly that I do think he has a different world view. And I think it's in part molded out of a very different experience. Most of us grew up going to Boy Scout meetings and, you know, our communities were filled with Rotary Clubs, not madrassas.

SYLVESTER: If you listen to the wording carefully, Huckabee never actually says Barack Obama attended a madrassa, a school typically linked to a mosque. But the liberal media watchdog group Media Matters says the inference is enough.

ARI RABIN-HAVT, MEDIA MATTERS: Mike Huckabee claims, I'm not a birther, I'm not part of that, but he's clearly using dog whistle language to appeal to those who have those feelings. You know, I'm going to sneak in the word "Kenya," I'm going to talk about madrassas, even though it's proven that Barack Obama did not attend a madrassa in Indonesia. I'm going to throw that word in.

You know, it's an intentional dog whistle towards a certain element of the Republican electorate that he has to appeal to the in the primary.

SYLVESTER: On the campaign trail in 2008, the question came up, did Obama attend a madrassa during his childhood years living in Indonesia? CNN sent a crew to Indonesia and found he attended a secular and a Catholic school, not a madrassa.

Huckabee's comments come just two days after he twice said in another interview that President Obama was raised in Kenya. In fact, Obama was raised in Indonesia and Hawaii. Huckabee has dismissed it as a slip of the tongue. All of this comes as Mike Huckabee tries to stay at the top of the pack of Republican presidential possibles. The latest polls place him ahead of Mitt Romney, Newt Gingrich and Sarah Palin.

(END VIDEOTAPE)

SYLVESTER: Now, we reached out to Mike Huckabee's spokesman to get a comment on Media Matters' argument that these latest comments are part of a deliberate effort to paint the president as anti- American and as an outsider. Hogan Gidley, executive director of Huck PAC, told us, "People who read the governor's full comments about the president in his new book will completely understand, but those who don't probably won't hear the whole story" -- Wolf.

BLITZER: So he's not apologizing, he's not backing out of the statement about the madrassas.

SYLVESTER: No, he is not backing. And he says, you know, read the book and read -- but he clearly is trying to make an argument here that President Obama has a different viewpoint than many Americans. You know, I think it goes back to that whole point of did he or was he not attending a madrassa, and that whole point about, was he a Boy Scout? Which, incidentally, Wolf, I should say that President Obama was a Boy Scout at one point, too.

BLITZER: OK. Thanks very much, Lisa, for that.

We're going to have more on this part of the story, more on Huckabee.

The GOP's new leader, the Republican National Committee chairman, Reince Priebus, he's here in THE SITUATION ROOM.

And startling new evidence on the whereabouts of a retired FBI agent who vanished in Iran four years ago.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

BLITZER: And joining us now here in THE SITUATION ROOM, Reince Priebus. He's the new chairman of the Republican Party.

Mr. Chairman, thanks very much for coming in.

REINCE PRIEBUS, CHAIRMAN, RNC: As a guy growing up in Kenosha, it's an honor to be here with you today.

BLITZER: Well, good for you, and good for those Green Bay Packers. I know you're pretty happy about that as well.

PRIEBUS: The cheese heads have had a pretty good two months.

BLITZER: Yes. Let's see how your future months are going to be. You've got a lot of issues on your agenda.

PRIEBUS: Yes, we do.

BLITZER: Let's go through a couple of little political things. The political season, heating up.

Mike Huckabee, when he said -- we just heard Lisa Sylvester's piece about the president of the United States growing up with madrassas, as opposed to Rotary Clubs.

Does he owe the president an apology?

PRIEBUS: I don't think he owes the president an apology. You know, he has -- we have freedom of speech in this country. I suppose he can have his own opinion. I don't think he owes an apology to the president, no.

BLITZER: What is Huckabee's agenda do you think right now? Because he knows he didn't grow up in a madrassa. I mean, he went to a school in Indonesia, but that was not a madrassa.

PRIEBUS: Well, listen, I can't speak for where Mike Huckabee's coming from. I wouldn't pretend to try. And it's not my position to do that. So I don't think he owes him an apology. He has his opinion, and I would just leave it at that.

BLITZER: And let him state his opinion.

Let's talk a little bit about the Tea Party right now, the Tea Party movement and the mainstream Republican leadership, John Boehner, the Speaker of the House.

The Tea Party nation founder, Judson Phillips, he's suggesting that Boehner is letting them all down. And if he continues to do so, in a statement he said, "The Tea Party movement should find a candidate to run against John Boehner in 2012 and should set as a goal to defeat in a primary the sitting Speaker of the House of Representatives."

Wow. That shows a significant split is developing, potentially among your people, the conservatives and the Republicans.

PRIEBUS: Well, I don't think so. I mean, I'm not sure what the context is of this statement or where it comes from.

BLITZER: That Boehner's not doing enough to cut the deficit, to cut the budget.

PRIEBUS: Right. And I'll tell you this, as chairman of this party, and I think speaking as part of a conservative movement in this country to get our fiscal train back on the rails, I'm grateful that we have people like Speaker Boehner, Paul Ryan, Eric Cantor, who I think are being very serious about deficits and spending in this country. And thank God that we are, as a party, debating how much to cut right now in this country. And I think that's where the debate needs to be had.

I'm grateful we have a caucus that's debating this issue, how much to cut. And I think that's the right debate to have, and I'm grateful that they're doing it.

So I don't agree with that particular statement, but I do think that we need to focus our energy on cutting spending, getting our deficit under control, and putting our financial train back on the rails.

BLITZER: Do you see a split, though, developing between the Republican leadership, the gentleman you just referred to, as opposed to the Tea Party movement?

PRIEBUS: No, I don't. I think we're all on the same page here on what we need to do in this country.

We are very shortly going to be, when my son is my age, spending 42 cents on every dollar made in America to run the federal government. Now, that's an America that I don't want to pass on to my kids and grandkids. So I think we're all on that same page.

Now, I think, certainly, there will be disagreements on how much to cut, but I think we're having that debate. And I think Paul Ryan is going to come back in April and deliver a very serious budget, and everything is going to be on the table.

BLITZER: You've inherited a real financial mess at the Republican National Committee. How much in debt is the RNC right now?

PRIEBUS: Well, Wolf, it is a mess. We have a $15 million line of credit that is hocked up to the maximum it can go. We have $8 million, approximately, of unpaid vendors right now from the last election.

So we have approximately $23 million in the hole. We're trying to rebuild trust with our donors, rebuilding our party. And that's a big job.

BLITZER: So the question that some folks will say, if the Republican Party can't get its own financial house in order, why should they trust the Republicans to get the nation's house in order?

PRIEBUS: Well, that's why I'm working like a dog here, Wolf, to get the financial house in order. And that's what I need to do as chairman.

That's why I ran for chairman, is to get our finances under control, why we need to pay off the debt, add to the presidential trust so that we can defeat this president who's taking our country in the wrong direction. And that's what I need to do as chairman of this party.

BLITZER: We're going to continue this conversation, but a quick question.

BLITZER: Let's get right back to Jack. He's got "The Cafferty File" -- Jack.

CAFFERTY: The question this hour is: What's the answer to worsening relations between the U.S. and Mexico?

John says: "The answer is to close the border once and for all and then enforce it. Look at the success Israel has had with its security fence. Once we finally do this, we can stop the shipment of arms to Mexico, the shipment of drugs to the U.S., and the flow of illegals into this country."

"What's the real reason that the U.S. government refuses to do this? It can be done, but clearly they don't want to."

Richard in Pennsylvania: "It's time to bring home our troops from the Middle East, post them on our southern border with Mexico. We'll save tons of money and finally protect our people from incursions by illegals and the drug cartels." Steve says: "Their only problems is with a couple of their exports, people and drugs. Most everything else is reasonably good."

Greg in Pennsylvania: "There's a war going on at the border and Mexico. And we're the ones supplying them with the money and guns. Our war on drugs is to blame for this."

"If the leaders of our government could do one intelligent thing, it would be to end the prohibition of marijuana. The prohibition of alcohol tore this country apart decades ago, just as the prohibition of marijuana is doing today."

Simon in Florida writes, "An electrified border fence."

Joe in New York says, "As long as U.S. employers are free to act without genuine fear of prosecution for hiring illegal aliens and U.S. big business promotes cheaper wages, less rights, and non-unions, then we have no answer for the worsening relations with Mexico. All U.S. actions are based solely on satisfying big business interests and have no solution for the poor immigrants or poor Americans."

And Tom in Pennsylvania writes, "It's easy, Jack. Legalize drugs."

If you want to read more on the subject, you'll find it on my blog, CNN.com/caffertyfile.

BLITZER: See you in a few moments, Jack. Thank you.

More than two decades after the deadly bombing of Pan Am Flight 103 in Scotland, a renewed call to bring Gadhafi to trial, what victims' families have now heard that trigger their fresh call for justice.

And the Libyan leader has vowed to stay in Libya or die a martyr. But if he were driven to exile, where could he go?

(COMMERCIAL BREAK)

BLITZER: It's been 23 years since Pan Am Flight 103 was blown out of the sky over Lockerbie, Scotland. Now victims' families are renewing their demand that Gadhafi be prosecuted for the attack.

CNN's Mary Snow is in New York. She's working the story for us, speaking to some of the family members.

What's the latest on this story, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, the major reason behind these new calls have to do with statements that were made by the now former justice minister in Libya who has cut ties with the Gadhafi regime.

(BEGIN VIDEOTAPE)

SNOW (voice-over): This interview last week with the former justice minister is what is behind new calls to prosecute Moammar Gadhafi for the 1988 bombing of Pan Am Flight 103. Two hundred seventy people were killed. Most were Americans.

CNN obtained this video of Mustafa Abdul Jalil, heard here in a translation telling a Swedish newspaper that Gadhafi was directly involved.

SNOW: Jalil didn't provide evidence. But in a letter to President Obama and the secretary of state, two families cite Jalil's words in calling to prosecute Gadhafi. Hillary Clinton told the Senate Foreign Relations Committee that she has reached out to the Justice Department and FBI.

HILLARY CLINTON, SECRETARY OF STATE: I don't think it's only Gadhafi. I think that there may be others as well who were involved in some way. And like you, I would like the families to have whatever information they can finally get and then whatever legal action we can take.

SNOW: Abdelbaset Ali al-Megrahi was the only man was ever convicted in the Pan Am 103 bombing. Said to be near death suffering from prostate cancer, he was released from a Scottish prison and returned to Libya in 2009 on compassionate grounds. He is still alive.

JACK FLYNN, SON KILLED ON PAN AM FLIGHT 103: I think we have to have a fair trial.

SNOW: Jack and Kathleen Flynn lost their son J.P., who was returning home with other students from a semester abroad. They say they've always believed Gadhafi was behind the bombing.

KATHLEEN FLYNN, SON KILLED ON PAN AM FLIGHT 103: It's a very horrible scenario to go through life knowing that someone murdered your child and there was no justice was done.

SNOW: Bert Ammerman isn't hopeful he'll ever see Gadhafi tried. His brother Tom was killed in the bombing. Ammerman wants the U.S. to be directly involved in removing the Libyan dictator from power.

BERT AMMERMAN, BROTHER KILLED IN BOMBING: His just reward should be capital punishment. But if he's removed from power, that, to me, would mean that our loved ones didn't die in vain. And that's why our inaction is frustrating and irritating me immensely.

(END VIDEOTAPE)

SNOW: Wolf, you heard Secretary of State Clinton saying she reached out to the FBI and the Justice Department. A spokesman for the Justice Department says that the investigation into the bombing of Pan Am Flight 103 remains open. And today, New Jersey's two senators -- they represent families of the victims -- say they're anxious to hear from Libya's former justice minister and see what evidence he's been talking about -- Wolf.